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5 Takeaways from the Disney-Fox Merger

  1. What is it? This is a huge merger involving two brands that you know and love. The Walt Disney Co. is acquiring most of the assets of 21st Century Fox for $52.4 billion in stock, or $66.1 billion after the assumption of debt, creating a content behemoth that will have the power to reshape the sports and entertainment landscapes. Their combined heft will give them even more leverage over cable companies and internet service providers, while strengthening their online video streaming services, according to experts at Wharton and elsewhere.
  1. What will Disney get? If the deal passes antitrust muster (if it stands the test of Federal Trade Commission antitrust laws that prohibit corporate mergers if they give one company too much power in the market, which means consumers wouldn’t benefit from actions like competitive pricing), Disney will get Fox’s film and TV studios, Star India and a 39% stake in European pay TV giant Sky, 22 regional sports networks, as well as entertainment properties including “The Simpsons” and Avatar, cable networks FX and National Geographic and a controlling stake in online video service Hulu. Fox is retaining its national sports channel, its broadcast and news operations, local TV stations and the Big Ten sports network. While the merger would help Disney grow its annual revenues from its current $55.1 billion to $74.1 billion, Fox would downsize correspondingly from $29 billion to $10 billion, according to a Wall Street Journal report. Herbert Hovencamp, a Penn Law professor who is also a Wharton professor of legal studies and business ethics, says the merger “will produce a much more powerful Disney, able to compete better with streaming services like Netflix and Amazon.” However, Hovencamp, who is an antitrust law scholar, expects the merger to attract “close review” from regulators, especially with the combination of ESPN and several Fox sports networks.
  1. What does this mean for the industry and for Fox? A more powerful Disney with the Fox assets could trigger other such deals, according to Wharton professor of operations, information and decisions Jehoshua Eliashberg. “It is likely to lead to more mergers and acquisitions and fewer, but more powerful, competing conglomerates.” Hovencamp says that Netflix as the market leader in its space could find itself as a merger target. As for 21st Century Fox: “Fox either had to get a lot bigger in entertainment and in streaming or get out,” said University of Michigan professor Erik Gordon during a visit to the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. “Being in the middle is exactly where you don’t want to be.”
  1. What about Disney’s video streaming strategy? As Netflix, Google, Facebook and Amazon strengthen their muscles in entertainment, Disney will be able to compete against them better with the Fox assets in its fold, notably with a bigger voice in Hulu. Its larger content repertoire would give Disney a more robust online video service. Disney also recently announced new online streaming services as well as “ESPN Plus,” a streaming service slated for spring 2018, and a Disney-branded service in the latter half of 2019.
  1. Where does Mickey play into all of this? The power that Disney would get with the Fox assets also goes beyond making money from content, says Hemant Bhargava, chair in technology management at the University of California at Davis. “Disney’s business model … is about getting people to recognize [its brand] and then selling them toys, clothing, [tickets to] theme parks,” he notes. “As long as Disney is able to capture consumers through streaming but not necessarily make a lot of money, that’s okay because they can then monetize those consumers and the brand in other ways.” In other words — see you at Disney World.

Conversation Starters

What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.

What does it mean that the deal must pass "antitrust muster?"

Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?

9 thoughts on “5 Takeaways from the Disney-Fox Merger

  1. 1. The merger was prompted because the 2 companies realized that they would get more “leverage” by joining as one. Also, Disney would get almost 25 billion dollars in profit a year. The merger could also lead to other deals that could benefit the company.
    2. The deal passing “antitrust muster” means that the government has to approve of the merger for it to be legitimate.
    3. Net neutrality is the rule saying that everyone on the internet gets treated equally. For example, rich people and poor people pay the same price for Netflix. It influences this deal by controlling the future online services for Disney and Fox by making prices same for everyone.

  2. What prompted the Disney- Fox merger was that their combined heft would give them both more leverage over cable companies and internet service providers. While doing that it also strengthens their online video streaming services.

    The antitrust muster is if the deal passes the test of Federal Trade Commission antitrust laws, Disney will get all it’s assets said to be given.

    Net Neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source without favoring or blocking particular products or websites. In regard to this deal, this principle controls their future online services by making prices the same for everyone.

  3. 1. The Disney-Fox merger was prompted by both companies wanting more leverage over other cable and internet-service providers. The merger will also strengthen their online video streaming services.
    2. The Federal Trade Commission will look into whether this merger will give this company too much power or influence on the market, and if it does, it will not let the deal happen.
    3. Net neutrality is the principle that Internet service providers must treat all data on the Internet the same. The impact of net neutrality on this deal is uncertain, as some in the FCC want to end net neutrality so we do not know how net neutrality can influence the deal for sure.

  4. What prompted the Disney-Fox merger was that will give them more authority in over cable companies, strengthen their online services, and create a new sports picture on T.V
    When the deal must pass through “antitrust muster” it must go through government regulations to make sure that this deal will not create a monopoly over the markets.
    Net neutrality is where the government no longer have control on how much internet companies charge for internet and their services. This affects the deal because they will be able to charge however much they want because they are in the internet industry.

  5. What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
    What prompted the Disney-Fox merger was that they would get more power as one, the companies will get a lot more profit, and the merger will also strengthen streaming services online.

    What does it mean that the deal must pass “antitrust muster?”
    The deal must pass “antitrust muster” means that the Federal Trade Commission will look into the merger and make sure they don’t gain too much power or else the merger will be stopped.

    Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
    Net neutrality is the principle that internet service providers must treat all data on the internet the same. The influence from net neutrality is that they can charge users whatever they choose because they are in the internet business.

  6. 1. I think what prompted the Disney-Fox merger is that streaming has become a highly profitable market, and both companies will be able to make money from it by combining their resources. Disneys three reasons to merge would be: 1. more TV networks to aquire, 2. more film content 3. Hulu. Foxes three reasons to merge would be: 1. a powerful partner 2. a way to compete with streaming services 3. a lot of financial assets.

    2. The deal passing the “antitrust matter” means it must be approved by the government. This is to prevent one company from having too much power and control over a market. It also makes sure that things like competitive pricing can benefit customers.

    3. Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source. It influences this deal because an important aspect of this deal is to compete in the streaming market. Since net neutrality has been repealed, these companies can charge however much they want.

  7. 1. The merger was facilitated by both companies wanting more leverage over other cable and internet-service providers. The merger will also strengthen their online video streaming services.
    2. The deal must pass “antitrust muster”. This means that the Federal Trade Commission (FTC) will look into the merger and ensure that they don’t gain too much power or else the merger will be stopped.
    3. Net neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source, and without favoring or blocking particular products or websites.

  8. What prompted the Disney-Fox merger? Give at least three reasons why the merger might make sense for both companies.
    1)The Disney-Fox merger will give Disney more authority in other cable companies, strengthen their online services, and create a new sports picture on T.V

    What does it mean that the deal must pass “antitrust muster?”
    2) The deal must pass antitrust muster, means that the FTC “Federal Trade Commission” will look into the merger and authorize it so they don’t gain too much power over the market, or else the merger will be canceled
    .
    Net neutrality also factors into the Disney-Fox merger. While it is not addressed in this summary, it is addressed in the longer K@W article about the merger cited in Related Links. What is net neutrality and how does it influence this deal?
    3) Net neutrality is the principle that Internet service providers must treat all data on the Internet the same. The impact of net neutrality on this case is uncertain, as some people in the FCC want to end net neutrality so we don’t know how net neutrality would affect this deal.

  9. 1. The merger might make sense in both companies because it will alter the sports and entertainment landscapes. It will give them more leverage over cable companies and internet service providers. It will also strengthen theri online video streaming services.
    2. The deal passing the “antitrust matter” means it must be authorized by the government
    The deal has to go through a test of Federal Trade Commission. This prevents one company from having to much power and monopolizing the market. Also it makes sure that competitive pricing benefit the customers.
    3. Net Neutrality is the principle that Internet service providers should enable access to all content and applications regardless of the source without favoring or blocking particular products or websites. The influence from net neutrality is that Disney-Fox can charge users anting they choose because they are in the internet field of business.

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